The Study On Audit Failure Of CPA-based On Satyam Audit Failure

With the further development of China’s socialist market economy, the CPA profession developsand expands continually in our country. Along with the capital market being developed and perfected day by day, people demand increasing audit and lay more emphasis on the quality of accounting information, andthe audit reports issued by CPA become the focus of attention. However, because audit failures emerge in endlessly at home and abroad in recent years, the reliability of accounting firms and CPA profession among the public experiences a sharp decline. Audit failures often affect the accounting information user’s decision-making behavior, cause huge economic losses to investors, seriously impede the healthy development of capital market, and influence the survival and healthy development of the accounting industry. The research on causes of audit failures and exploration of preventive measures of audit failures are of great significance to strengthen the supervision of the capital market in China and improve the quality of accounting information of listed companies. This dissertation researches the causes of audit failures in the firms under research by case study, and put forward preventive measures to reduce audit failures basing on that, thus promotes thedevelopment of the CPA profession, capital market and companies under auditing. Moreover, we hope thisresearch will inspire the practice research for CPA of our country to prevent audit failures.The first part of this dissertation provides the background and significance of this study and reviews the literature of audit failures issued by scholars at home and abroad. The second part defines audit failures, compares audit failures, audit risk and operation failures, and analyzes the consequences of audit failures from the aspects of CPA, firms under auditing and the capital market. The third part takes the audit failure of PWC on India Satyam for example, and describes the development of the event. Then focuses on thediscussion of the causes of the audit failure aforementioned from the perspective of CPA, units under auditing and social economics. Basing on the analysis of the case, the fourth part provides measures to avoid audit risk, especially to prevent audit failures from the perspective of CPA. The fifth part concludes the work we have done, the innovations and shortages of this dissertation.The study methods of this dissertation:(1) Systematic analysis. This dissertation reviews related literature of audit failures at home and a broad, explores the causes of audit failures from a number of aspects, and tries to find ways to address theaudit failures as response to questions we put forward.(2) Case analysis. Applying theory to practice through case study, this dissertation analyzes thecauses and response measures of audit failures.